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Apr-27-2008US Consumer Confidence Falls to 26-Year Low(topic overview)
CONTENTS:
- The latest look at U.S. consumer confidence has shown a distinct decline, with record gasoline prices, falling home values, rising inflation and higher unemployment combining to produce the most pessimistic consumer in a quarter of a century. (More...)
- "Rising uncertainty about future living standards has caused consumers to adopt more prudent spending plans and become more wary of incurring new debt," said survey director Richard Curtin. (More...)
- The index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, dropped to 53.3 from 60.1 last month. (More...)
- The Nasdaq Composite Index fell 5.99, or 0.3 percent, to close at 2,422.93 in New York. (More...)
- Just three-in-ten consumers plan to spend the economic stimulus tax rebate in 2008, with most consumers preferring to repay debt and add to saving. (More...)
- Rising inflation, higher joblessness, and smaller income gains has made most consumers more cautious spenders. (More...)
- Analysts said the Seattle-based company effectively lowered sales expectations for the year and one analyst pointed to slower U.S. sales growth in books, CDs, other media items, electronics and general merchandise. (More...)
- Japan's annual inflation accelerated to a 10-year high of 1.2 percent in March, the Ministry of Internal Affairs and Communications said on Friday, marking the largest annual increase since a 1.8 percent on-year jump in March 1998. (More...)
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The latest look at U.S. consumer confidence has shown a distinct decline, with record gasoline prices, falling home values, rising inflation and higher unemployment combining to produce the most pessimistic consumer in a quarter of a century. Authors of the Reuters/University of Michigan report said their index of consumer sentiment fell to 62.6 in the current month survey. That was down from 69.5 in March and the lowest reading since March 1982. [1] April 25 (Bloomberg) -- Confidence among U.S. consumers probably fell this month to its lowest level in a quarter century as gasoline prices rose to a record and unemployment climbed, economists said before a report today. The Reuters/University of Michigan index of consumer sentiment probably decreased to 63.2 this month, the weakest level since 1982, from 69.5 in March, according to the median forecast in a Bloomberg survey of 60 economists.[2] The report provided more evidence that the U.S. consumer is in distress, beset by concerns about soaring prices, jobs concerns, and a prolonged housing slump. Consumer sentiment fell to its lowest level in 26 years in April, according to the revised reading of the Reuters/University of Michigan consumer sentiment index that was released on Friday, with the index coming in below economist estimates.[3]
GDP measures the value of final goods and services produced. The final Reuters/University of Michigan monthly index of consumer sentiment will be released at 10 a.m. EDT. The market anticipates the revised reading of 63.2, which is the same as the preliminary one issued two weeks ago, according to a consensus estimate of Wall Street economists surveyed by Thomson/IFR. It would be the lowest reading since 1982. The Reuters/University of Michigan survey consists of telephone interviews of 500 respondents who are asked about their attitudes toward, and expectations of, the U.S. economy. The index, created in 1952, reached its lowest reading, 51.7, in May 1980, during a deep recession. Internet hype helped push it to its 112 peak in January 2000.[4]
"The recent acceleration in the loss in confidence indicates a longer and potentially deeper recession," survey director Richard Curtin said. "All households now anticipate smaller income gains and larger price increases, as just one-in-five now expect their overall finances to improve during the year ahead, the least favorable reading in more than a quarter century." The index is at its lowest point since March 1982's reading of 62.0, when stagflation concerns - high inflation coupled with low growth - were still taking a toll. Due to surging prices on food and fuel and an economy that has already shed 250,000 jobs so far this year, consumer sentiment is taking a beating.[5] "Rising uncertainty about future living standards has caused consumers to adopt more prudent spending plans and become more wary of incurring new debt," Curtin said. Flagging confidence, once limited to lower-income households, is now seen throughout the spectrum, he added. President Bush yesterday urged consumers to keep their chins up, noting that the first of his recently enacted tax rebates will start being distributed today. Curtin said that many of the people in his survey think the cash will be too little, too late. Less than one-third of consumers said they plan to spend their rebates this year, Curtin said. Most of those surveyed said they intend to save the money or pay down debts, neither of which will have as direct a stimulus effect on the economy. "With the current high levels of economic uncertainty, most consumers favor adding to their reserve funds to increase their financial latitude as a safeguard against worsening future conditions," Curtin said. The Index of Consumer Sentiment was 62.6 this month, Reuters and the university said. That is down sharply from last month's reading of 69.5 and well below the 87.1 recorded a year ago.[6] Investors have been waiting for the survey, which indicates the index on the consumer sentiment and the economy's current health, showing if people like to spend money in the economy. The report indicated that only 30 percent of consumers surveyed indicated that they plan to spend their upcoming tax rebate. The rest of people surveyed said they would use it to pay off debt or put it into savings. "Consumer confidence is as bad as it's been since 1982 - I'm losing confidence as well every time I put $90 of gas in my jeep to get to work," Art Hogan, chief market economist at Jefferies & Co., told MarketWatch.[7]
The Index of Consumer Expectations, which economists use to help determine the economy's future direction, fell to 53.3 in April, a decline of 6.8 points from the previous month. According to the survey, only 30% of consumers plan to spend their upcoming tax rebate, while the rest said they would use it to pay off debt or put it into savings.[8]
The government is giving up to $600 to many taxpayers as a way to boost the economy. The Michigan consumer survey also reported that while a tax rebate will bolster spending, consumers surveyed are planning "by a wide margin" to use the extra dough to pay down debt and add to their savings. Standard & Poor's chief U.S. economist, Joseph A. LaVorgna, said Friday that American's dour mood probably means the American economy is on the slide "since consumer spending is such a large part of the economy, comprising about 70.0% of GDP, the extent to which consumers reduce spending will have a significant impact on monetary policy."[9] President George W. Bush today said Americans will start getting that tax rebates next week and predicted the money will give the economy a boost. Economists surveyed by Bloomberg earlier this month forecast consumer spending will rise at a 0.5 percent pace in the first half of the year, the smallest gain since 1991.[10] "We expect to continue to see a challenging automotive retail market as long as the current economic difficulties persist,'' Chief Executive Officer Michael Jackson said in a statement. Economists surveyed by Bloomberg earlier this month forecast consumer spending will rise at a 0.5 percent pace in the first half of the year, the smallest gain since 1991.[2]
WASHINGTON -- Consumer pessimism about the U.S. economy is expected to reach the lowest point in nearly 26 years when a final reading of April's consumer sentiment is released Friday. Wall Street pays close attention to consumer sentiment as its corollary, consumer spending, represents about 70 percent of U.S. gross domestic product.[4] The weaker than expected consumer sentiment reading is likely to add to concerns about the strength of the U.S. economy, as consumer spending makes up approximately two-thirds of the overall economy.[3]
Consumer spending accounts for about two-thirds of total U.S. economic activity, so widespread belt-tightening by cautious consumers could make the downturn even more severe. This week, the Bank of Canada lowered its growth estimates for the Canadian economy for this year and next, citing a "deeper and more protracted slowdown" for the U.S. economy than it had anticipated just three months ago.[1] President George W. Bush acknowledged that the U.S. economy was in a "slowdown" but said tax rebates that will start hitting consumers' bank accounts next week should help. "The money's going to help Americans offset the high prices we're seeing at the gas pump and the grocery store and it will also give our economy a boost to help us pull out of this economic slowdown," Bush said. The government has accelerated its schedule for distributing the rebate payments under a $152 billion economic stimulus package.[11] "More consumers reported hearing news reports of unfavourable economic developments in April than any other time in the 50-year history of the survey, with job losses, rising prices and the fallout from the housing and credit crisis dominating the reports," Curtin said. U.S. President George W. Bush said Friday he hoped that the $168 billion U.S. in rebate cheques that start going out to 130 million households next week will help to revive the economy.[1] Curtin noted that "More consumers reported hearing news reports of unfavorable economic developments in April than any other time in the fifty years history of the survey, with job losses, rising prices, and the fallout from the housing and credit crisis dominating the reports. Uncertainty about future income and job prospects has had a devastating impact on buying plans, with consumers citing these uncertainties three times as frequently as they did a year ago. Purchase plans for furniture, appliances, home electronics, and similar goods fell to their lowest level since the early 1980s, with one-third of all consumers specifically mentioning their uncertainty about jobs and incomes as their primary reason.[12] NEW YORK (CNNMoney.com) -- Consumer confidence sank to its lowest level in 26 years, according to a survey published Friday. The University of Michigan Consumer Confidence survey revealed that high food and fuel prices, coupled with shrinking incomes and falling home values, have driven consumers to save their money rather than spend it.[8] New York, NY (AHN) - Consumer confidence for the preliminary April slipped to its lowest level in 26 years, according to a survey released on Friday.[7]
A dismal report on consumer confidence has raised fears about consumer spending in the U.S. A monthly survey conducted by the University of Michigan was revised lower to 62.6 for April, its lowest level in 26 years.[13] The Reuters and University of Michigan consumer sentiment survey revealed that U.S. consumer confidence fell for the third consecutive month in April, to the lowest level in 26 years.[9]
A new snapshot of consumer confidence in the U.S. has dropped to the lowest level in 26 years.[14]
U.S. consumer confidence levels fell in April to their lowest level since March 1982, amid rising concern about the inflation outlook.[15] RAPAPORT. Consumer confidence in the United States' economy''fell in April to its lowest level since March 1982, according to the Reuters/University of Michigan monthly index.[16] The Reuters/University of Michigan Surveys of Consumers index of confidence for April fell to 62.6 from 69.5 in March, sliding deeper into recessionary territory and coming in worse than economists had expected. It was the worst reading since March 1982, when the "stagflationary" period of low growth and high inflation was still an issue for many Americans.[11] The euro lost more than two cents after a downbeat German business confidence survey and an unexpected drop in American claims for jobless benefits. The Reuters/University of Michigan released its consumer sentiment index Friday, which fell to 62.6 for April from 69.5 a month earlier. It was the lowest reading since the early 1980s.[17] The Reuters/University of Michigan consumer sentiment index dropped to 62.6 for April from 69.5 a month earlier. It was the lowest reading since the early 1980s as Americans contended with rising energy and food prices.[18]
WASHINGTON (Thomson Financial) - Consumer sentiment, as measured by the Reuters/University of Michigan index, fell to its lowest point since 1982, while long-term inflation expectations among consumers rose slightly in late April.[19] Five-year inflation expectations rose to 3.2 per cent from 2.9 per cent. The index of consumer expectations for six months from now fell 6.8 points to 53.3, while Americans' perceptions of their current personal finances worsened, with the index dropping to 86 from 93.[20]
TJ Marta, fixed income strategist from RBC Capital Markets, said "In looking for historical comparisons, the current situation is morphing from a 2001 or 1990 towards a 1980 or 1973 scenario." Consumer expectations inched down one-tenth to 53.3 in the final survey from 53.4 in the advance survey, while the current conditions index fell to its lowest level since 1983 at 77.0, down from 78.4 in the advance survey.[21] The survey's Index of Consumer Sentiment, a closely watched indicator of the economy's current health, fell to 62.6 in April, a drop of 6.9 points from the previous month and the lowest level since 1982.[8]
The credit crunch that has hobbled Wall Street is metastasizing into a consumer crisis that is threatening a much wider and deeper swath of the economy. Consumer sentiment plummeted this month to its lowest level in 25 years, Reuters and the University of Michigan report.[6]
NEW YORK (Reuters) - The warning signs of a U.S. recession flashed again on Friday as consumer sentiment sank to its lowest in 26 years and corporate earnings appeared set for their third consecutive quarter of contraction. The dour data and grim outlook for companies could present a dilemma for the Federal Reserve, which is seen as eager to wind down its campaign of aggressive interest rate cuts even though the economy is still struggling.[11] NEW YORK -- Shares of real estate investment trusts closed mixed Friday after a consumer sentiment reading fell to its lowest level in more than 25 years and consumers awaited tax rebate checks.[18]
NEW YORK -- The final reading for April consumer sentiment is likely to come in on Friday near a 26-year low, according to Global Insight economists.[22]
Most of Friday's news came from data released overnight, including Japanese headline CPI inflation soaring to a 10-year high. The University of Michigan/Reuters consumer sentiment survey reported further deterioration in its revised consumer sentiment index for April, which inched down an additional six-tenths to a 26-year low.[23] The University of Michigan consumer sentiment survey index fell to a 26-year low of 62.6 in April, down from 69.5 in March.[24] The Reuters/University of Michigan consumer sentiment survey for the soon-to-end month saw the overall index move to 62.6, from 69.5 in March.[15]
Investors want to see if the preliminary April reading for the Reuters/University of Michigan consumer sentiment index will offer insight into the mind-set of the consumer as the economy slows down.[25] WASHINGTON (Thomson Financial) - Consumer sentiment, as measured by the Reuters/University of Michigan index, fell to 62.6 in late April, from a reading of 63.2 in early April.[26]
The ABC News/Washington Post Consumer Comfort Index edged down to a negative 40 in the week ended April 20 from a negative 39 in the previous period. The University of Michigan's lower than expected reading on consumer sentiment reflected a deterioration in both consumers' assessments of current conditions and their expectations for the future.[3] The Reuters/University of Michigan Surveys of Consumers showed the confidence index reading lost 6.9 points month-over-month to 62.6, missing analysts' expectations of 63.2, according to a Reuters poll.[20]
Definition : Michigan consumer sentiments index a survey of consumer confidence conducted by the University of Michigan.[27] The index is becoming more and more useful for investors. It gives a snapshot of whether or not consumers feel like spending money in the economy. Why is it useful? The importance of consumer confidence index at currency market is considered moderate, because it influences consumers consumption level, so if the expected percentage inclines, it means that the consumer confidence in the local economic will likely to improved and it effects consumers' willingness to spend money that allows them to obtain available utilities granted by the economy; as a result the aggregate demand on goods and services will increase which cause rising production quantities produced by different factories. Accordingly the local currency supply quantity becomes more available in the market, and certainly this will strengthen the currency. At the same time this indicator has a similar effect on the stock market, because if it shows positive figures that means it will leave a significant improvement on several companies stocks in different sectors, as an outcome to increasing consumers' willingness to spend more money to satisfy their needs from diverse goods and services, which pushes up stock indices. Some studies proved that this effect might be theatricality true, that in fact it might not leave any considerable effect on the local currency; that's why the effect is not necessarily valid every time and is moderate.[27] The sharply lower April reading rattled investors as consumer spending makes up about two-thirds of U.S. economic output and many economists believe the world's largest economy has already fallen into recession.[13] The reading is the lowest since March 1982. The survey said high fuel and food prices, plummeting home values and declining income gains contributed to growing consumer pessimism in April, with nearly 90 per cent of consumers surveyed saying they thought the U.S. economy was currently in recession.[20] The April result is the lowest since March 1982's 62.0, when the "stagflationary" period of low growth and high inflation was still an issue for many Americans. "More consumers reported that their personal financial situation had worsened than any time since 1982 due to high fuel and food prices as well as shrinking income gains and widespread reports of declines in home values," the survey said.[9]
U.S. consumer confidence dropped to a 26-year low in April, as rising inflation and low growth combined to deepen financial worries for American households.[20]
A new report shows consumer confidence in the U.S. at a 26-year low, as record fuel prices and rising unemployment threatened to worsen spending.[28] U.S. consumer confidence fell to a 26-year low in April, more than forecast, as record fuel prices and rising unemployment threatened to reduce spending.[29]
"Rising uncertainty about future living standards has caused consumers to adopt more prudent spending plans and become more wary of incurring new debt," said survey director Richard Curtin. The survey's findings of accelerating pessimism suggest a "longer and potentially deeper recession," he said. Almost 90 per cent of those surveyed said they thought the U.S. economy was already in recession and three-quarters thought the financial woes would last at least another year. [1] Consumer spending is the primary driver of the U.S. economy.'' As consumers become more worried about the economy, they spend less. The news is weighing on the stock markets this morning, as the major indices have given up their gains for the day.''[30]
The survey found that some 9 out of 10 respondents believe the economy is now in recession, in a view that lines up with economists' assessments. Economists are generally cautious in drawing meaning from consumer sentiment surveys, given that consumers' feelings about the economy don't always reflect their actual spending patterns.[15] Economists had forecast the consumer sentiment gauge would fall to 63.2 from 69.5 in March, according to the median of 60 projections in a Bloomberg News survey.[10]
The Index of Consumer Sentiment was 62.6 in the April 2008 survey, down from 69.5 in March, and significantly below the 87.1 recorded last April and the recent peak of 96.9 recorded in January of 2007.[12] The Index of Consumer Expectations, a closely watched component of the Index of Leading Economic Indicators, was 53.3 in the April 2008 survey, down from 60.1 in March, and well below the 75.9 recorded in April 2007 and the recent peak of 87.6 in January 2007.[12] The index of current economic conditions fell to 77.0 in late April from 78.4, and the index of consumer expectations fell slightly to 53.3 from 53.4.[19] The current conditions index fell to 77.0 in April from 84.2 in March, while the expectations index fell to 53.3 in April from 60.1 in the previous month.[3]
With the downward revision, the reading for April was even further below the March reading of 69.5 and was the lowest reading for the index since March of 1982. While the index came in below expectations, Peter Boockvar, equity strategist at Miller Tabak & Co., said the reading should not come as a surprise in light of the weakness in this week's ABC poll, which has a high correlation to the University of Michigan's index.[3]
The Conference Board's consumer confidence index unexpectedly declined to a reading of 64.5 in March despite forecasts for a reading of 73.5. Their April report comes out on April 29.[21] NEW YORK (AP) — Stocks are mixed in early trading as investors await a reading on consumer confidence and digest a busy week of corporate earnings reports.[25]
"For energy-producing states, the fiscal situation is strong and the outlook is good. That situation is in stark contrast to states where the housing sector slump has been particularly severe or other fiscal challenges have prevailed." Echoing bad news from individual states, the consumer sentiment report said its confidence index tumbled in April to 62.6 from 69.5 in the previous month.[9] The report said that the consumer sentiment index sank to 62.6 in April, the lowest level since 1982.[7] High commodity costs, a weakening employment situation and the continued housing slump combined to push consumer sentiment down to its lowest level in a quarter-century.[5]
Earlier in the week, the weekly consumer comfort report from ABC News and the Washington Post posted a one-point loss to come in at -40, the lowest level since July 1993.[21]
Though the stimulus rebates, due to start arriving in mailboxes next week, will boost spending temporarily, rising prices for food, gas and other essentials along with worries about income levels could cause consumers to spend less through late 2008 and early 2009, according to Curtin.[8] "Sentiment is mired at levels that historically have been associated with recessions," said Steve Wood, chief economist of forecasting firm Insight Economics. "This largely reflects the job losses, the housing market meltdown, turmoil and volatility in the financial markets, and higher food and energy prices," he said. In an ominous sign for the government's fiscal stimulus efforts, many survey respondents said they are expecting to use government rebate checks to pay down debt or increase savings. President George W. Bush said he had solid expectations for the rebates, which came as part of a $US152 billion ($163 billion) economic stimulus effort that will send cheques of up to $US600 per taxpayer, $US1200 per couple, and $US300 per child. "This money's going to help Americans offset the high prices we're seeing at the gas pump (and) at the grocery store," Mr Bush said.[15] More importantly, expectations for the next six months fell to 53.3 from a reading last month of 60.1. The survey revealed Americans' confidence in their financial situation dropped to 77 from 84.2 last month. This data shows that consumers are more hesitant in making big-ticket purchases.[31] The Reuters/University of Michigan consumer survey found just three in 10 people plan to spend the rebate. Most say they will repay debt or add to savings. Just one in five Americans expect their overall financial picture to improve in the next year. That's the least favourable reading in more than 25 years.[1]
According to Bloomberg, the Reuters/University of Michigan sentiment index fell to 62.6, dropping from a prior month's reading of 69.5 and registering a 26 year low.[31] The consumer sentiment index for late April fell to 62.6 from a reading of 63.2 in early April.[19] The reading on the consumer sentiment index for April was revised down to 62.6 from the previously reported 63.2.[32]
The index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, dropped to 53.3 from 60.1 last month. [10] All the details are in our Power Plays Report. This entry was posted on Friday, April 25th, 2008 at 10:31 pm and is filed under Consumer Spending, Top News. You can follow any responses to this entry through the RSS 2.0 feed.[5] Consumer spending is expected to remain weak for the first half of 2008 with motor vehicle sales expected to slide down more in the second quarter, the firm added.[4] The gauge averaged 85.6 in 2007. Consumers are growing increasingly anxious as the economy lost almost a quarter million jobs so far this year, the cost of refueling a car is up 17 percent and property values have slid. Sales of big-ticket items such as houses and cars have weakened as a result, contributing to a slowdown in spending that may bring an end to the six-year expansion.[2] The measure was down from a preliminary estimate of 63.2 issued on April 11, said the financial news agency. Consumers have become jittery because the economy has shed some 250,000 jobs this year alone. That, while gasoline costs have risen 17 percent and housing values have plummeted.[28] The measure was down from a preliminary estimate of 63.2 issued on April 11. Consumers are growing increasingly anxious because the economy has lost almost a quarter million jobs so far this year, gasoline is up 17 percent and property values have fallen.[33]
The economy is unlikely to grow at all through June, the survey also showed. Those polled put the odds of the economy entering a recession this year at 70 percent, up from 50 percent in the prior month's poll.[2] The survey said that 90% of consumers believed the economy was in a recession, and 75% believed the economic problems will persist for at least another year.[8] According to the survey, around 90 percent of consumers believed that the economy was in a recession, while, as much as 75 percent said that the country's economic problems will sustain for another 12 months.[7]
Nearly nine-in-ten consumers thought the economy was already in recession, and three-in-four anticipated that bad times financially would persist for at least another year. This was the worst assessment of overall economic since the early 1980's.[12]
Nearly nine in 10 consumers surveyed thought the U.S. economy was in recession. A study released Friday indicated that some states' budgets show they are already in recessionary territory with "slowing or declining revenue from personal income, general sales and corporate income taxes the principal reason."[9] Inflation has been an enduring problem for the U.S. economy, amid a near constant upward movement in prices of energy and food, which have in turn been bleeding into the core measures of price pressures watched by Federal Reserve policy makers. Most central bankers and private sector economists expect the weak economy will act as it always has and cool inflation, but many are nevertheless worried the Fed is putting its inflation fighting credibility at risk.[15] The dollar has been weighed down recently by a combination of gloomy U.S. economic data and high European inflation. That has fueled expectations that the Federal Reserve will cut interest rates yet again while the European Central Bank leaves rates unchanged or even raises them, a possibility deflated by Thursdays German business confidence survey. "We are just seeing a continuation of upward adjustment for the dollar on a combination of exhaustion of the euro surge, and market expectations that there may not be a lot more easing on interest rates by the Fed," said Bob Sinche, head of global foreign exchange strategy at Bank of America Corp. UniCredit analysts said in a research note that "the U.S. dollar recovery across the board. looks fairly excessive at this stage." They noted that "nothing has really changed on the current economic scenario."[17]
The report also showed that consumers now expect faster inflation, with the one-year inflation expectations reading rising to 4.8 percent in April from 4.3 percent in March.[3] The one-year inflation expectations reading deteriorated to 4.8 per cent, up from the prior month's 4.3 per cent, while the five-year inflation reading was 3.2 per cent, also up from 2.9 per cent in March.[15]
The report's one-year inflation expectations rose to 4.8% from 4.3% in March. This measure was the highest it's been since October 1990.[9] Americans seem to think inflation will slow in the longer run; five-year inflation expectations rose to 3.2% from 2.9% in March.[9]
Just two months ago, inflation expectations were at 3.5%. Following the preliminary release, HFE chief economist Ian Shepherdson said, "Bearing in mind that more than half of all consumption is non-discretionary (food, energy, housing, etc.) this means discretionary spending will fall at a 1% rate or more, something we haven't seen since 1991.[21] The survey put inflation expectations for the coming year at 4.8 pct, the same level seen in early April.[19]
The company said consumers in California, Florida and other states plagued by plunging home prices are unwilling to buy big-ticket items. Web retailer Amazon.com Inc. on Thursday reported its first-quarter earnings climbed 29 percent from the same period a year ago, while revenue rose 37 percent, both measures beating Wall Street expectations.[4] Consumers are clearly concerned about inflation as Americans believed prices would increase 4.8% over the next year. From the Bull Pen : Another bit of ugly news and the tape spikes.[31] The report said Americans expected inflation to reach 4.8 per cent in the next year, up 0.5 percentage points from a month earlier and the highest level since 1990.[20]
The Nasdaq Composite Index fell 5.99, or 0.3 percent, to close at 2,422.93 in New York. A measure of current conditions, which reflects Americans' perceptions of their financial situation and whether it's a good time to make big-ticket purchases like cars, decreased to 77 from 84.2 last month. [10] "We look for consumption to slow markedly,'' said Drew Matus, senior economist at Lehman Brothers Holdings Inc. in New York. "This is consistent with our view that the economy is currently in recession.''[2] "Consumer confidence continues to tank," said Kevin Flanagan, fixed-income strategist in the global wealth management unit at Morgan Stanley in Purchase, New York.[11] New York's popular street food vendors will start charging more to keep up with the rising price of everything.[17] The pound rose to $1.9826 in late New York trading from $1.9755, while the Japanese currency was unchanged at 105.26 yen.[17]
Crude prices rose on initial reports that a U.S. ship had fired on two Iranian boats; the news raised concerns that a conflict between U.S. and Iranian forces could cut oil supplies from the region.[33] Oil prices rose sharply Friday on news that a ship under contract to the U.S. Defense Department fired warning shots at two boats in the Persian Gulf.[33]
At about 9:40 am ET, the dollar reached 1773.50 against the Colombian peso, compared to a multi-year low of 1761.10 hit on Wednesday. U.S. Treasury Secretary Henry Paulson said on Thursday that he was willing to talk in an interview with House Speaker Nancy Pelosi about her ideas for new legislation to help the U.S. economy in connection with setting up a vote on the Colombia Free Trade agreement. On the housing side, he said he was supportive of parts of a Democratic plan to expand Federal Housing Administration insurance.[32] The Michigan report comes amid difficult times for the U.S. economy and financial markets, and the survey's findings clearly reflected that environment.[15]
Nearly nine in 10 consumers thought the economy was now in recession, Reuters/University of Michigan said, Reuters reported.[5] 'The recent acceleration in the loss in confidence indicates a longer and potentially deeper recession,' according to Richard Curtin, the Director of the Reuters/University of Michigan Surveys of Consumers.[12]
Survey from the University of Michigan says uncertain consumers intend to save their money rather than spend it.[8]
"Never before in the long history of the surveys have so many consumers reported hearing news of unfavorable economic development as in the April survey," the report read.[5] The report also pointed to other ominous economic indicators including rising gas prices, falling new homes sales and the overall rise in jobless claims. Thomson Financial and Reuters contributed to this story.[9]
The nationwide decline in home values cannot be ignored. Home prices are down 10% across the country, according to the S&P; Case-Shiller home-price index, making consumers less likely to spend as they see their home equity levels dropping.[5] Looking ahead, European economic data will remain in focus with the release of the preliminary estimates for the German consumer price index in April.[3]
The biggest housing slump in a generation is leading the downturn. Home prices nationwide have fallen 10 percent from their peak, according to the S&P; Case-Shiller home-price index, and many economists are forecasting values will keep dropping.[2] Economists had been expecting the index to come in unchanged from the previously reported reading for April.[32]
Economists had been looking for a slightly higher reading. It was the lowest since March 1982.[14] In the previous month, the headline was at 69.2, the lowest level since March 1982.[21]
Just three-in-ten consumers plan to spend the economic stimulus tax rebate in 2008, with most consumers preferring to repay debt and add to saving. 'With the current high levels of economic uncertainty, most consumers favor adding to their reserve funds to increase their financial latitude as a safeguard against worsening future conditions,' Curtin noted. [12] "We expect to continue to see a challenging automotive retail market as long as the current economic difficulties persist,'' Chief Executive Officer Michael Jackson said in a statement. Only one-third of consumers polled by the University of Michigan said they planned to spend the tax-rebate checks that the Treasury Department is poised to send as part of the Bush administration's economic stimulus plan.[10]
Rising food prices and pending job losses were'' cited by consumers for creating''a sour economic mood.[16] Although the tax rebate will boost spending temporarily, the global rise in food and fuel prices, the declines in home values and higher credit standards are likely to persist for some time and lengthen the period of stagnation in consumption. Coupled with weaker job and income growth, these factors are likely to cause a relapse in spending latter in 2008 and into early 2009 and potentially deeper cutbacks in consumption than has been anticipated.[12] Consumers are faced with rising energy and food costs, declining home values and a shaky job market and are cutting back on spending as a result.[22]
"Meanwhile, declining home and stock prices are eroding household net worth and prompting consumers to curtail discretionary spending," the firm said.[4]
Pessimistic consumers are often more reluctant to spend, Curtin added, and that can translate into weakness throughout the economy, two-thirds of which depends on consumer spending.[6] 'Rising uncertainty about future living standards has caused consumers to adopt more prudent spending plans and become more wary of incurring new debt,' Curtin said.[12]
The index, which gauges consumers' security about the near future, was 75.9 in April 2007 and 87.6 at the beginning of last year.[6] U.S. consumers were also less likely to say it was a good time to make big-ticket purchases, with that index falling to 77 from 84.2 month-over-month.[20]
From here you can use the Social Web links to save U.S. consumer confidence at 26-year low to a social bookmarking site.[15] Rising energy costs, a slumping housing market and employment concerns are killing the confidence of the American consumer.[31]
Consumers polled for the survey put April's sentiment at 62.6 points, down from 69.5 points in March 2008.[16] While lower income households have complained for some time about declining inflation-adjusted incomes, in the latest survey the same declines were anticipated by upper income households as well. 'All households now anticipate smaller income gains and larger price increases, as just one-in-five now expect their overall finances to improve during the year ahead, the least favorable reading in more than a quarter century,' Curtin said.[12] Foreclosure filings jumped 57 percent and bank repossessions more than doubled in March from a year earlier as rates on adjustable mortgages increased, Irvine, California-based RealtyTrac Inc., a seller of default data, said last week.[2] Rising fuel costs have contributed to a drop in auto sales and prompted some shoppers to limit trips to malls. The average price of regular unleaded gasoline rose to a record $3.56 a gallon this week, according to data from AAA.[2] Germany's index of import prices increased 5.7% year-on-year in March, slower than the 5.9% expected, the Federal Statistical Office reported Friday.In February, import prices rose 5.9% followed by 5.2% increase in January.[3]
The Reuters/University of Michigan sentiment index decreased to 62.6, from 69.5 the previous month.[33] For the third straight month, the Reuters/University of Michigan sentiment index registered a decline.[5]
The University of Michigan index is generally considered a good indicator of economic downturns but is sometimes slow to predict a recovery.[22]
From the January 2007 peak, the Expectations Index has fallen 39%; the Expectations Index fell by 24% prior to the 1990 recession and by 30% prior to the 2001 recession.[12] Japan's annual inflation accelerated to a 10-year high of 1.2 % in March, the Ministry of Internal Affairs and Communications said today, marking the largest annual increase since a 1.8 % on-year jump in March 1998.The reading was exactly in line with analyst expectations following an increase of 1.0 % in February.[32] Core inflation, which excludes the prices of fresh food, also jumped by an annual 1.2 % to match expectations following a 1.0 % increase in February.[32] Long-term inflation expectations rose slightly to 3.2 pct, up from the 3.1 pct seen in early April.[19] One-year inflation expectations were unrevised at 4.8%, still indicating a half-point advance from the previous month's 4.3% expectation.[21]
Rising inflation, higher joblessness, and smaller income gains has made most consumers more cautious spenders. [12] "Consumers are feeling the pinch, not only from the labor market, but also from prices,'' Aaron Smith, an economist at Moody's Economy.com in West Chester, Pennsylvania, said in a Bloomberg Television interview. "There's a squeeze on incomes from two sides," he added. (c) 2008 Newsroom.[28]
Economists surveyed by Dow Jones Newswires had been expecting a sentiment reading of 63.0.[15]
The sentiment headline edged down to a level of 62.6 in the final survey, down from the advance report of 63.2.[21] The report finds 9 of 10 respondents believe the economy is in recession. Many said they expect to use government rebate checks to pay down debt or add to savings.[14] The economy lost 80,000 jobs in March, the most in five years, following a 76,000 drop in payrolls in each of the prior two months, according to figures from the Labor Department.[2] The British economy grew only 0.4 percent in the first quarter as the credit squeeze tightens its grip on the.[17] Traders considered data that showed the UK economy registered an annual growth of 2.5% in the first quarter.[24]
The Mexican central bank said yesterday that annual inflation in the first half of April rose to 4.53 %. This set a fastest pace since May 2005, and above the bank's forecast of 4.5 % for the second quarter.[32] Chilean Central Bank President Jose De Gregorio said on Friday that inflation would gradually decrease in the second half of the year.[32]
Mexican consumer prices unexpectedly increased in early April, putting pressure on the central bank to hold interest rates steady at 7.5 % for the sixth straight month on April 18.[32] Wachovia Corp. has agreed to pay an estimated $144 million to settle federal allegations that it failed to stop telemarketers charged with taking advantage of thousands of elderly consumers. The federal Office of the Comptroller of the Currency said Friday that Charlotte, N.C. -based Wachovia didn't act quickly enough to block telemarketers and payment processors who maintained their accounts at the bank.[33] "Weakness in the consumer will become more of an issue going forward and that's going to pressure shares," Damon Barglow, a Boston-based managing director at Eastern Investment Advisors, which oversees about $1.7 billion, told Bloomberg. "You've seen oil move a lot higher this week and that's something that consumers are going to have to contend with."[7]
Analysts said the Seattle-based company effectively lowered sales expectations for the year and one analyst pointed to slower U.S. sales growth in books, CDs, other media items, electronics and general merchandise. [4] AutoNation Inc., the largest publicly traded U.S. car dealer, yesterday said first-quarter profit fell 35 percent as weak housing markets in states including California hurt demand for new vehicles.[2] Regardless, bears see the major headwinds for companies like Honda Motor ( HMC ) with a slowing U.S. economy and a strengthening in the Japanese yen.[31]
Japan's annual inflation accelerated to a 10-year high of 1.2 percent in March, the Ministry of Internal Affairs and Communications said on Friday, marking the largest annual increase since a 1.8 percent on-year jump in March 1998. [24]
SOURCES
1. U.S. consumers most pessimistic since 1982
2. Bloomberg.com: Worldwide
3. RTTNews - Realtime Economic News, Global Economic News and Reports, Asian Economic News, Economic Calendar.
4. Ahead of the Bell: Consumer Sentiment | Chron.com - Houston Chronicle
5. Consumer Sentiment Battered by High Fuel, Housing Slump
6. Consumer Confidence Slumps - Portfolio.com
7. Consumer Sentiment Index Drops To 62.6, Weakest Since 1982 | April 27, 2008 | AHN
8. Consumer confidence lowest since 1982, according to survey - Apr. 25, 2008
9. Subprime Slide Sours Consumer Sentiment - Forbes.com
10. Bloomberg.com: Economy
11. Consumers, companies flash recession warnings | Reuters
12. Huntington News
13. RT' Business: US consumer mood at 26-year low
14. WBOC-TV 16, Delmarvas News Leader, FOX 21 - Sentiment index shows deeper troubles
15. US consumer confidence at 26-year low | The Australian
16. Diamonds.net News - April Consumer Sentiment at Lowest Level Since 1982
17. Dollar gains against euro amid weak US economic data and downbeat German business confidence - International Herald Tribune
18. Closing Glance: REITs mixed, consumer sentiment reading dips | Chron.com - Houston Chronicle
19. US late April Reuters/Michigan consumer sentiment falls to 62.6 vs 63.2 expected - Forbes.com
20. Ottawa Business Journal - Home Page
21. Canadian Economic Press - Welcome
22. On the Watch: Consumer sentiment expected to slide | Chron.com - Houston Chronicle
23. Friday's News Recap: U.S. Consumer Sentiment Down, Oil Back on the Rise
24. Forex Latest News - Yen Mixed Versus Major Counterparts
25. The Associated Press: Stocks open narrowly mixed ahead of consumer confidence data
26. US late April Reuters/Michigan consumer sentiment falls to 62.6 vs 63.2 expected | Latest News | News | Hemscott
27. Michigan Consumer Sentiment - Apr 25 - Forex News | IBT FX Center
28. Consumer Confidence at 26-Year Low
29. Consumer confidence low
30. U. Of Michigan Consumer Sentiment Hits 26 Year Low - CNBC By The Numbers - MSNBC.com
31. Minyanville - NEWS & VIEWS-Article
32. RTTNews - Currency Trading, Currency Market Update, Trading Opportunities, US Market Update .
33. National business briefs
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